U.S China Trade Deficit

Before the rise of communism in China, the Country was a world power, a nation strong enough to influence events throughout the rest of the world. They were also isolationists, abstaining from political or economic relations with other countries. Due to their isolation, there was a drastic decline in China’s power. In 1920, when China became a communist government, they became more open to trade. As of today, one of their biggest trading partners is the United States. At this time, the U.S. exported $69.6 billion in goods and services to China (about the same as 2008), while it imported over $296 billion, down significantly from 2008. We call this a trade deficit; an excess of imports over exports. This is a concern for many Americans today, because some think that the United States is investing too much money in China and need to stop trade. I believe that trade with China is definitely a good thing, with caution. If the unevenness of trade continues, the U.S is going to lose money, while China on the other hand, takes in a lot. It’s important that the U.S balances out their imports and exports, to continue trade with this foreign Country. As of 2009, the U.S trade deficit with China was $227 billion. There is a trade deficit with China because the Country is able to produce low-cost goods that Americans want. They are able to produce these goods, mainly because in China there is a lower standard of living. This makes it easier to pay workers a lower wage. Also, China has an exchange rate that is moderately set to be always priced lower than the dollar.

The U.S. trade deficit with China is impacting the U.S economy greatly, and injuring U.S. workers. Companies can't compete with cheap Chinese goods, so they have to either lower their costs or go out of business. To lower their costs, many companies have started outsourcing to India and China, adding to U.S. unemployment. This has caused deterioration in the trade balance (the difference between exports,...

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...Introduction of a Deficit
The very word “deficit” carries with it a heavy, negative connotation. A deficit is an indication that something of perceived value is lacking. Merriam Webster defines a deficit several ways: (1) “a deficiency in amount or quality;” (2) “a lack or impairment in a functional capacity;” (3) “a disadvantage;” (4) “an excess of expenditure over revenue;” and (5) “a loss in business operations.”
Given these definitions, it is no wonder that the topic of the U.S. tradedeficit emanates a picture of doom and gloom for many U.S. officials. A U.S. tradedeficit occurs when the cost of imports exceeds the earnings from exports; or in simpler terms, the United States as a whole is buying more than it is selling. However, in the realm of international trade, the key word is ‘trade’. While some may view the tradedeficit as a series of irresponsible and lopsided monetary transactions, the ‘trade’ goes well beyond the simple exchange of goods and money. A tradedeficit does not necessarily equate to a nation in the red, and more importantly, ‘import’ is not a dirty word.
Why Trade?
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...focused on the impending tradedeficit our country continues to run. Both candidates for the presidency have argued for ways in which they intend to bring balance to the economy. The United States has been running a consistent tradedeficit with its trading partners since the 1970s (Budget of the, 2012). The Great Recession (2008-2012) saw huge deficits that are continuing to worry American citizens. Many Americans are asking the government to find a way to balance the federal budget. However, not all believe that tradedeficits are bad for the economy. In fact, some would argue that growing tradedeficits are showing that the economy is growing alongside income levels (Markheim,2010). The following will explore the balance of trade history while looking at contributing factors as well as observing important trade partners for the United States.
The United States has traditionally run stagnant trade surplus/deficits up until the 1970s. The only exception was during World War II. During the war the U.S. was importing goods at high rates as most of the work force was fighting overseas. The U.S. began running a tradedeficit in 1971 and has continued to do so, with the exception of 1975, until today (Balance on goods, 2012). The cause for...

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The United States international trade has been thriving over time. As of December 2012, Canada (total trade with U.S. was $616.7 billion), China ($536.2 billion), Mexico ($494 billion), Japan ($216.4 billion), and Germany ($157.3 billion) are the top five trade partners of U.S. In which the closest trade relationship of U.S. is with China (United States Census Bureau.)
The United States has been trading with the People of Republic of China for a long time. The trade relationship between U.S. and China had not been grown rapidly until 2001, when China joined the World Trade Organization (WTO). One of the primary reasons China could get into the WTO was the then president Bill Clinton. He encouraged Congress to remove strains of trade relations with China permanently in Spring 2000 because he believed trading with China would benefit U.S.'s economy. At that time, China had the largest population in the world with over 1.2 billion, so former Clinton's confidence in having relationship with China, the largest potential market, would help U.S. export its...

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U.S.-China relations became a breakthrough in history in 1979 when both countries came together and diplomatically ensued a positive political and economic future. A small but well beginning started in 1980 when U.S.-Chinatrade was $2 billion, which was the summation of both imports and exports. At the time China was the United States’ 48th largest source of imports and 23rd largest export market. U.S.-Chinatrade in the past 30 years has dramatically increased ever since. U.S.-Chinatrade in 1981 rose from $5 billion to $503 billion in 2011. As of now China is the United States’ second biggest trading partner (behind Canada), third biggest export market (Canada being first, Mexico second), and number one source of imports. In 1985 the U.S. tradedeficit with China was $0 billion with U.S. imports equaling U.S. exports to China. Being that U.S. imports from China are higher and are now increasing more than U.S. exports to China; the U.S. merchandise tradedeficit has risen from $10 billion in 1990 to $296...

...DEBATE: TRADEDEFICITS ARE BAD
Position Statement: The tradedeficit drains money from our economy, lowers our wages and forces us into an ever-lower standard of living.
A tradedeficit occurs when the total imports of goods and services are greater than the total exports of goods and services.
The tradedeficit not only drains the economy jobs, it sends essential pieces of our industrial ecosystems out of the country. And this means that it is sending our ability to make a living in the future out of the country, too.
Tradedeficits lead to a lowering in the value of the dollar compared to other currencies. This raises the costs of imported goods and causes inflation. It leads to more foreign ownership of our assets and companies.
This is a real problem that is hurting people, hurting small and mid-sized companies, hurting communities, hurting our tax base and hurting our ability to make a living in the future. Every dollar of tradedeficits makes our country a dollar poorer.
When factories are closed and shipped out of the country people lose their jobs. And the rest of the people are afraid of losing their jobs, so they “keep their heads down.” Companies can make them accept lower wages. They work longer hours. They even stop taking vacations and sick days. They certainly don’t ask for...

...TradeDeficit and Current Account Deficit
[Name of the Writer]
[Name of the Institution]
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Critically examine this statement, “Current Account Deficits do not seem to matter anymore – the US$ appears to remain unaffected by escalating US tradedeficits”, by reference to the “Balance of Payments Approach” to exchange rate determination
The tradedeficit of the US is at exorbitantly high levels. Many economists suggest that depreciating the US dollar would help put a squeeze on United States enthusiasm for globally produced goods. Since this move of depreciation would inherently curb the exaggerated import costs that the US so loves to incur. Furthermore, these three critical factors essentially would help limit the import prices incurred by US due to the trend of rising demands that has permeated in the societal culture:
* The practice of using USD for US trade invoicing;
* Exporters concerns on market share dynamics, and;
* The outrageous US distribution costs.
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...A: Yes. He is betting that tradedeficit will not be fixed and American’s bad habit of borrowing from abroad to pay for today will not stop. This is caused by Americans spending far more on imports than they are earning from exports. To finance this tradedeficit, the U.S. borrows from abroad. Also, the U.S. government is spending more than it takes in from taxes. The budget deficits widens the gap between the national income and national savings and increases the deficit in the current account by requiring more borrowing from abroad. The widening current deficit puts pressure on U.S. currency in the financial markets. As long as Americans are willing to buy cheap imported goods and the U.S. government has a budget deficit, Warren Buffett is making an excellent move by betting against dollar. Already, the dollar has fallen 40% between 2002 and 2007 as the U.S. debt grew 60% (Amadeo).
2. Why has the United States developed such large current account deficit?
A: One main reason why United States has developed such large current account deficit is the tradedeficit. The tradedeficit describes a state of balance of trade which negative where U.S. importing goods...